Arhaus, Inc.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q for thenine and three months ended September 30, 2025 (“Form 10-Q”) and our Annual Report on Form 10-K for the year ended December 31, 2024. This Form 10-Q contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or are proven incorrect, could cause our business and results of operations to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements can generally be identified by the use of forward-looking terminology, including, but not limited to, “may,” “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” “believe,” “will,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “forecast,” or variations of these terms and similar expressions, or the negative of these terms or similar expressions. Past performance is not a guarantee of future results or returns and no representation or warranty is made regarding future performance. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond our control that could cause our actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following:

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q for the three months ended March 31, 2026 (“Form 10-Q”) and our Annual Report on Form 10-K for the year ended December 31, 2025. This Form 10-Q contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or are proven incorrect, could cause our business and results of operations to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements can generally be identified by the use of forward-looking terminology, including, but not limited to, “may,” “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” “believe,” “will,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “forecast,” or variations of these terms and similar expressions, or the negative of these terms or similar expressions. Past performance is not a guarantee of future results or returns and no representation or warranty is made regarding future performance. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond our control that could cause our actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following:

Previous wording

The risks, uncertainties and assumptions referred to above that could cause our results to differ materially from the results expressed or implied by such forward-looking statements include, but are not limited to, those discussed under Item 1A. Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2024, as well as those included under Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025. All forward-looking statements included in this document are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements. These statements are based on information available to us as of the date of this Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

Current wording

The risks, uncertainties and assumptions referred to above that could cause our results to differ materially from the results expressed or implied by such forward-looking statements include, but are not limited to, those discussed under Item 1A. Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025. All forward-looking statements included in this document are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements. These statements are based on information available to us as of the date of this Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

Previous wording

The following discussion contains references to thenine and three months ended September 30, 2025 and September 30, 2024, which represents the condensed consolidated financial results of Arhaus, Inc. and subsidiaries for thenine and three months ended September 30, 2025 and September 30, 2024, respectively.

Current wording

The following discussion contains references to the three months ended March 31, 2026 and March 31, 2025, which represents the condensed consolidated financial results of Arhaus, Inc. and subsidiaries for the three months ended March 31, 2026 and March 31, 2025, respectively.

Previous wording

For thenine months ended September 30, 2025, we generated $1,014.4 million of net revenue, $397.2 million of gross margin and $52.2 million of net and comprehensive income. For thethree months ended September 30, 2025, we generated $344.6 million of net revenue, $133.4 million of gross margin and $12.2 million of net and comprehensive income.

Current wording

For thethree months ended March 31, 2026, we generated $314.3 million of net revenue, $114.4 million of gross margin and $2.2 million of net and comprehensive income.

Previous wording

Net Revenue and Demand. Net revenue is recognized when a client obtains control of the merchandise. We also track demand in our business which is a key performance indicator linked to the level of client orders placed. Demand is an operating metric that we use to measure the dollar value of orders (based on purchase price) at the time the order is placed, net of the dollar value of cancellations and returns (based on unpaid purchase price and amount credited to client). These orders are recognized as net revenue when a client obtains control of the merchandise. Because demand is measured net of cancellations, all demand will eventually become net revenue, with appropriate reserves, when delivered to the client.

Current wording

Net Revenue and Written Sales (Formerly “Demand”). Net revenue is recognized when a client obtains control of the merchandise. We also track written sales in our business which is a key performance indicator linked to the level of client orders placed. Written sales is an operating metric that we use to measure the dollar value of orders (based on purchase price) at the time the order is placed, net of the dollar value of cancellations and returns (based on unpaid purchase price and amount credited to client). These orders are recognized as net revenue when a client obtains control of the merchandise. Because written sales is measured net of cancellations, all written sales will eventually become net revenue, with appropriate reserves, when delivered to the client.

Previous wording

Comparable Growth. Comparable growth is the year-over-year percentage change of the dollar value of orders delivered (based on purchase price), net of the dollar value of returns (based on amount credited to client), from comparable Showrooms and eCommerce, including through our catalogs and other mailings. This metric is a key performance indicator used by management to evaluate Showroom performance for locations that have been opened for at least 15 consecutive months, which enables management to view the performance of those Showrooms without the dollar value of orders delivered for new Showrooms being included. Comparable Showrooms are defined as permanent Showrooms open for at least 15 consecutive months, including relocations in the same market. Showrooms record demand immediately upon opening, while orders delivered take additional time because product must be delivered to the client. The dollar value of orders delivered for Outlet comparable locations is included.

Current wording

Comparable Delivered Sales (Formerly “Comparable Growth”). Comparable Delivered Sales is the year-over-year percentage change of the dollar value of orders delivered (based on purchase price), net of the dollar value of returns (based on amount credited to client), from comparable Showrooms and eCommerce, including through our catalogs and other mailings. This metric is a key performance indicator used by management to evaluate Showroom performance for locations that have been opened for at least 15 consecutive months, which enables management to view the performance of those Showrooms without the dollar value of orders delivered for new Showrooms being included. Comparable Showrooms are defined as permanent Showrooms open for at least 15 consecutive months, including relocations in the same market. Showrooms record written sales immediately upon opening, while orders delivered take additional time because product must be delivered to the client. The dollar value of orders delivered for Loft comparable locations is included.

Previous wording

Comparable growth is an additional measure that management utilizes to compare the dollar value of orders delivered (based on purchase price) in a period compared to the prior comparable period. Since delivery generally coincides with recognition of net revenue, with appropriate reserves, comparable growth trends will more closely track trends in reported net revenue than demand comparable growth trends. While increases or decreases in demand comparable growth will translate into increases or decreases in comparable growth over time, the trends do not necessarily correlate in any particular period. This is partially due to the general lag in time between when an order is placed and when an order is delivered. When the time gap from order to delivery increases, due to supply chain challenges for example, it may take longer for comparable growth to reflect demand comparable growth. Notwithstanding these limitations, management considers it useful to assess both measures together to get a more complete picture of overall performance trends, and believes these measures can be useful to investors for the same purpose, when viewed together with our reported results and other metrics.

Current wording

Comparable Delivered Sales provides management insight into business performance for a particular period by comparing the dollar value of orders delivered (based on purchase price) in a period compared to the prior comparable period. Since delivery generally coincides with recognition of net revenue, with appropriate reserves, Comparable Delivered Sales trends will more closely track trends in reported net revenue than Comparable Written Sales.

Previous wording

Demand Comparable Growth. Demand comparable growth is the year-over-year percentage change of demand from our comparable Showrooms and eCommerce, including through our catalogs and other mailings. This metric is a key performance indicator used by management to evaluate Showroom demand performance for locations that have been opened for at least 13 consecutive months, which enables management to view the performance of those Showrooms without new Showroom demand included. For demand purposes, comparable Showrooms are defined as permanent Showrooms open for at least 13 consecutive months, including relocations in the same market. Outlet comparable location demand is included.

Current wording

Comparable Written Sales (Formerly “Demand Comparable Growth”). Comparable Written Sales is the year-over-year percentage change in written sales from our comparable Showrooms and eCommerce, including through our catalogs and other mailings. This metric is a key performance indicator used by management to evaluate Showroom performance for locations that have been opened for at least 13 consecutive months, which enables management to view the performance of those Showrooms without new Showroom written sales. For Comparable Written Sales, comparable Showrooms are defined as permanent Showrooms open for at least 13 consecutive months, including relocations in the same market. The dollar value of orders written for Loft comparable locations is included.

Previous wording

Demand comparable growth provides insight into business levels in a particular period by comparing the dollar value of orders (based on purchase price) placed in that period to the prior comparable period. Although these orders do not result in net revenue until the order is delivered at a later point in time, management utilizes this metric to evaluate core performance.

Current wording

Comparable Written Sales provides insight into business performance in a particular period by comparing the dollar value of orders (based on purchase price) placed in that period to the prior comparable period. Although these orders do not result in net revenue until the order is delivered at a later point in time, management utilizes this metric to evaluate core performance. While the underlying written sales that support this metric will generally translate into delivered sales over time, the Comparable Written Sales and Comparable Delivered Sales measures may not correlate in any specific period partially due the lag effects in both the numerator and denominator that occur between order placement and delivery, which tend to vary based on natural variations in the supply chain. Notwithstanding these limitations, management considers it useful to evaluate both measures together to assess overall performance trends and believes investors may find them useful when reviewed alongside reported results and other key metrics.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses include all operating costs not included in cost of goods sold. These expenses include payroll and payroll related expenses, Showroom expenses other than occupancy and expenses related to many of our operations at our distribution centers and corporate headquarters, including marketing, information technology, legal, human resources, utilities and depreciation and amortization expense. Payroll includes both fixed compensation and variable compensation. Variable compensation includes Showroom commissions and Showroom bonus compensation related to demand, likely before the client obtains control of the merchandise. Variable compensation is not significant in our eCommerce sales channel. All new Showroom opening expenses, other than occupancy, are included in SG&A expenses and are expensed as incurred. We expect certain of these expenses to continue to increase as we open new Showrooms, develop new product categories and otherwise pursue our current business initiatives. SG&A expenses as a percentage of net revenue are usually higher in lower-volume quarters and lower in higher-volume quarters because a significant portion of the costs are fixed.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses include all operating costs not included in cost of goods sold. These expenses include payroll and payroll related expenses, Showroom expenses other than occupancy and expenses related to many of our operations at our distribution centers and corporate headquarters, including marketing, information technology, legal, human resources, utilities and depreciation and amortization expense. Payroll includes both fixed compensation and variable compensation. Variable compensation includes Showroom commissions and Showroom bonus compensation related to written sales, likely before the client obtains control of the merchandise. Variable compensation is not significant in our eCommerce sales channel. All new Showroom opening expenses, other than occupancy, are included in SG&A expenses and are expensed as incurred. We expect certain of these expenses to continue to increase as we open new Showrooms, develop new product categories and otherwise pursue our current business initiatives. SG&A expenses as a percentage of net revenue are usually higher in lower-volume quarters and lower in higher-volume quarters because a significant portion of the costs are fixed.

Previous wording

Because adjusted EBITDA omits certain non-cash items and items that we believe are not reflective of underlying operating performance in a particular period, we feel that it is less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and can be more reflective of our operating performance in a particular period. We also use adjusted EBITDA as a method for planning and forecasting overall expected performance and for evaluating, on a quarterly and annual basis, actual results against such expectations.

Current wording

Adjusted EBITDA. We believe that adjusted EBITDA is a useful measure of operating performance as the adjustments eliminate items that we believe are not reflective of underlying operating performance in a particular period. Adjusted EBITDA facilitates a comparison of our operating performance on a consistent basis from period-to-period and provides for a more complete understanding of factors and trends affecting our business. Because adjusted EBITDA omits certain non-cash items and items that we believe are not reflective of underlying operating performance in a particular period, we feel that it is less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and can be more reflective of our operating performance in a particular period. We also use adjusted EBITDA as a method for planning and forecasting overall expected performance and for evaluating, on a quarterly and annual basis, actual results against such expectations.

Previous wording

(1)Other expenses (income) represent costs and investments not indicative of ongoing business performance, such as loss (gain) on disposal of assets.

Current wording

(1)Other expenses represent costs and investments not indicative of ongoing business performance, such as loss on disposal of assets.

Previous wording

Net cash provided by operating activities

Current wording

Free Cash Flow. We define Free Cash Flow as net cash provided by operating activities less net cash used in investing activities. We believe that Free Cash Flow is a useful measure that is helpful in understanding the strength of our liquidity and how our business generates cash. Management uses Free Cash Flow to evaluate our overall liquidity needs and determine appropriate capital allocation strategies. Free Cash Flow should not be considered in isolation or as an alternative to net cash from operating activities calculated in accordance with U.S. GAAP and should be viewed together with our other U.S. GAAP results.

Previous wording

The following tables summarize key components of our results of operations for the periods indicated. The following discussion should be read in conjunction with our condensed consolidated financial statements and related notes.

Current wording

The following tables summarize key components of our results of operations for the periods indicated and should be read together with our condensed consolidated financial statements and related notes.

Previous wording

Net revenue increased $25.5 million, or 8.0%, to $344.6 million in the three months ended September 30, 2025 compared to $319.1 million in the three months ended September 30, 2024. The increase was driven primarily by $14.7 million of revenue growth related to new Showrooms opened in 2024 and 2025, with the remainder due to increased demand for our products.

Current wording

Net revenue increased $2.9 million, or 0.9%, to $314.3 million in the three months ended March 31, 2026 compared to $311.4 million in thethree months ended March 31, 2025. The increase was driven primarily by $9.3 million of revenue growth related to new Showrooms opened in 2025, partially offset by lower demand for our products.

Previous wording

Gross margin increased $34.7 million, or 9.6%, to $397.2 million in the nine months ended September 30, 2025 compared to $362.5 million in the nine months ended September 30, 2024. The increase was primarily driven by higher net revenue, partially offset by increased product costs of $29.2 million, higher Showroom occupancy costs of $12.7 million and higher delivery and transportation costs of $7.7 million.

Current wording

Gross margin decreased $1.2 million, or 1.0%, to $114.4 million in the three months ended March 31, 2026 compared to $115.6 million in the three months ended March 31, 2025. The decrease was primarily driven by increased product costs of $4.1 million, higher Showroom occupancy costs of $1.5 million, and higher fuel costs of $1.2 million, partially offset by lower delivery and transportation costs of $3.4 million and higher net revenue.

Previous wording

As a percentage of net revenue, gross margin increased 10 basis points to 38.7% of net revenue in the three months ended September 30, 2025 compared to 38.6% of net revenue in the three months ended September 30, 2024. The gross margin increase as a percentage of net revenue was primarily driven by a product margin increase of 100 basis points and delivery and transportation costs, which decreased 30 basis points, partially offset by Showroom occupancy costs, which increased 70 basis points.

Current wording

As a percentage of net revenue, gross margin decreased 70 basis points to 36.4%of net revenue in thethree months ended March 31, 2026 compared to 37.1% of net revenue in thethree months ended March 31, 2025. The gross margin decrease was primarily driven by Showroom occupancy costs, which increased by 40 basis points and higher fuel costs, which increased by 40 basis points.

Previous wording

SG&A expenses increased $24.4 million, or 8.0%, to $328.5 million in the nine months ended September 30, 2025 compared to $304.1 million in the nine months ended September 30, 2024. The increase was due to a $12.8 million increase in selling expenses primarily related to new Showrooms and an $11.7 million increase in general and administrative costs primarily related to corporate expenses and strategic investments to support and drive the growth of the business and warehouse expenses.

Current wording

SG&A expenses increased $2.1 million, or 1.9%, to $112.2 million in the three months ended March 31, 2026 compared to $110.1 million in the three months ended March 31, 2025. The increase was primarily due to a $1.9 million increase in general and administrative costs related to strategic investments to support and drive the growth of the business, including supply chain and technology improvements, and other corporate expenses.

Previous wording

As a percentage of net revenue, SG&A expenses decreased 50 basis points to 32.4% of net revenue in the nine months ended September 30, 2025 compared to 32.9% of net revenue in thenine months ended September 30, 2024.

Current wording

As a percentage of net revenue, SG&A expenses increased 40 basis points to 35.7% of net revenue in thethree months ended March 31, 2026 compared to 35.3% of net revenue in thethree months ended March 31, 2025.

Previous wording

Interest income, net increased to $0.8 million in the three months ended September 30, 2025 compared to $0.5 million in the three months ended September 30, 2024.

Current wording

Interest income, net decreased to $0.5 million in the three months ended March 31, 2026 compared to $0.6 million in the three months ended March 31, 2025.

Previous wording

Net and comprehensive income increased $2.3 million to $12.2 million in the three months ended September 30, 2025 compared to $9.9 million in the three months ended September 30, 2024. The increase was driven by the factors described above.

Current wording

Net and comprehensive income decreased $2.7 million to $2.2 million in the three months ended March 31, 2026 compared to $4.9 million in the three months ended March 31, 2025. The decrease was driven by the factors described above.

Previous wording

Our primary cash needs have historically been for merchandise inventories, payroll, Showroom rent, marketing catalogs and capital expenditures associated with opening new Showrooms and renovating existing Showrooms, as well as the development of our infrastructure and information technology. We seek out and evaluate opportunities for effectively managing and deploying capital in ways that improve working capital and support and enhance our business initiatives and strategies. As of September 30, 2025, we had cash and cash equivalentsof $262.2 million.

Current wording

Our primary cash needs have historically been for merchandise inventories, payroll, marketing, Showroom rent, capital expenditures associated with opening new Showrooms and renovating existing Showrooms, as well as the development of our infrastructure and information technology. We seek out and evaluate opportunities for effectively managing and deploying capital in ways that improve working capital and support and enhance our business initiatives and strategies. As of March 31, 2026, we had cash and cash equivalentsof $177.1 million.

Previous wording

For thenine months ended September 30, 2025, our principal sources of liquidity were cash flows from operations. We believe our operating cash flows will be sufficient to meet working capital requirements and fulfill other capital needs for at least the next 12 months, although we may enter into borrowing arrangements in the future.

Current wording

Our principal sources of liquidity are primarily cash flows from operations. We believe our operating cash flows will be sufficient to meet working capital requirements and fulfill other capital needs for at least the next 12 months, although we may enter into borrowing arrangements in the future.

Previous wording

While we do not require debt to fund our operations, our goal is to position the Company to take advantage of the many opportunities that we may identify in connection with our business and operations. We have pursued in the past, and may pursue in the future, additional strategies to generate capital to pursue opportunities and investments, including new debt financing arrangements. In addition to funding the normal operations of our business, we have used our liquidity to fund investments and strategies such as growth initiatives, including supply chain and technology improvements. In addition, our needs and uses of capital may change in the future due to changes in our business or new opportunities that we choose to pursue. As of September 30, 2025, we have no material off-balance sheet arrangements.

Current wording

While we do not require debt to fund our operations, our goal continues to be to position the Company to take advantage of the many opportunities that we may identify in connection with our business and operations. We have pursued in the past, and may pursue in the future, additional strategies to generate capital to pursue opportunities and investments, including new debt financing arrangements. In addition to funding the normal operations of our business, we have used our liquidity to fund investments and strategies related to growth initiatives, including supply chain and technology improvements. Our needs and uses of capital may change in the future due to changes in our business or new opportunities that we choose to pursue. As of March 31, 2026, we have no material off-balance sheet arrangements.

Previous wording

On February 29, 2024, the Board of Directors of the Company declared a special cash dividend on the Company’s Class A and Class B common stock of $0.50 per share, payable April 4, 2024, to shareholders of record at the close of business on March 21, 2024. The Company paid $0.3 million of the aforementioned special cash dividend on its Class A common stock related to equity awards that vested during the nine months ended September 30, 2025 and $70.1 million on its Class A and Class B common stock to shareholders as of the Record Date during the nine months ended September 30, 2024.

Current wording

On February 29, 2024, the Board of Directors of the Company declared a special cash dividend on the Company’s Class A and Class B common stock of $0.50 per share, payable April 4, 2024, to shareholders of record at the close of business on March 21, 2024. The Company paid $0.1 million and $0.2 million of the aforementioned special cash dividend on its Class A common stock related to dividend equivalents on equity awards that vested during the three months ended March 31, 2026 and March 31, 2025, respectively.

Previous wording

We have begun a multi-year transformation that will replace certain of our existing systems with a modern and integrated platform encompassing a new enterprise resource planning system (“ERP”), an order management system and a transportation management system. The total incremental investment in connection with these technology upgrades is expected to be approximately $30 million, including implementation and project staffing costs as well as licensing fees through 2030. We anticipate approximately $2 million of cash outflows during the remainder of 2025, $12 million in 2026 and $10 million in 2027, with cash outflows tapering in early 2028 as we transition to annual licensing and maintenance costs of approximately $2 million per year through 2030.

Current wording

We have begun a multi-year transformation that will replace certain of our existing systems with a modern and integrated platform encompassing a new enterprise resource planning system (“ERP”), an order management system and a transportation management system. The total incremental investment in connection with these technology upgrades is expected to be approximately $30 million, including implementation and project staffing costs as well as licensing fees through 2030. Cash outflows were approximately $3 million during the three months ended March 31, 2026, and we anticipate approximately $12 million in 2026 and $10 million in 2027, with cash outflows tapering in early 2028 as we transition to annual licensing and maintenance costs of approximately $2 million per year through 2030.

Previous wording

In November 2021, the Company entered into a revolving credit facility (the “2021 Credit Facility”). The 2021 Credit Facility provides for, among other things, (1) a revolving credit facility in an aggregate amount not to exceed at any time outstanding the amount of such lender’s commitment, (2) a letter of credit commitment in an amount equal to the lesser of (a) $10.0 million, and (b) the amount of the revolving credit facility as of such date, and (3) a swingline loan in an amount equal to the lesser of (a) $5.0 million, and (b) the amount of the revolving credit facility as of such date. The aggregate amount of all commitments of all lenders under the 2021 Credit Facility was initially $50.0 million. The 2021 Credit Facility contains restrictive covenants and has certain financial covenants, including a maximum rent-adjusted total leverage ratio and a minimum fixed charge ratio. The 2021 Credit Facility initially bore variable interest rates at the prevailing Bloomberg Short-Term Bank Yield index rate plus the applicable margin (1.50% at September 30, 2024), whereas the applicable margin is adjusted quarterly based on the Company’s consolidated rent-adjusted total leverage ratio.

Current wording

In November 2021, the Company entered into a revolving credit facility (the “2021 Credit Facility”). The 2021 Credit Facility provides for, among other things, (1) a revolving credit facility in an aggregate amount not to exceed at any time outstanding the amount of such lender’s commitment, (2) a letter of credit commitment in an amount equal to the lesser of (a) $10.0 million, and (b) the amount of the revolving credit facility as of such date, and (3) a swingline loan in an amount equal to the lesser of (a) $5.0 million, and (b) the amount of the revolving credit facility as of such date. The aggregate amount of all commitments of all lenders under the 2021 Credit Facility was initially $50.0 million. The 2021 Credit Facility contains restrictive covenants and has certain financial covenants, including a maximum rent-adjusted total leverage ratio and a minimum fixed charge ratio. The 2021 Credit Facility initially bore variable interest rates at the prevailing Bloomberg Short-Term Bank Yield index rate plus the applicable margin, whereas the applicable margin is adjusted quarterly based on the Company’s consolidated rent-adjusted total leverage ratio.

Previous wording

In August 2024, the Company amended the 2021 Credit Facility to adjust the index rate from the Bloomberg Short-Term Bank Yield Index to Term Secured Overnight Financing Rate. The 2021 Credit Facility bears variable interest rates at the prevailing Term Secured Overnight Financing Rate plus the applicable margin (1.75% at September 30, 2025). In May 2025, the Company issued an irrevocable standby letter of credit under the 2021 Credit Facility in the amount of $5.1 million in connection with a lease, which remained outstanding at September 30, 2025. At September 30, 2025, we had no borrowings on the 2021 Credit Facility and the available borrowing capacity was $69.9 million.

Current wording

In August 2024, the Company amended the 2021 Credit Facility to adjust the index rate from the Bloomberg Short-Term Bank Yield Index to Term Secured Overnight Financing Rate. The 2021 Credit Facility bears variable interest rates at the prevailing Term Secured Overnight Financing Rate plus the applicable margin (1.75% at March 31, 2025).

Previous wording

In October 2025, the Company entered into the Third Amendment to Credit Agreement and Amendment to Security and Pledge Agreement (the “Amendment”). The Amendment further amends the 2021 Credit Facility to, among other things, (1) extend the maturity date of the revolving credit facility from November 8, 2026 to October 17, 2030, and (2) increase the letter of credit commitment to an amount equal to the lesser of (a) $15 million, and (b) the amount of the revolving credit facility as of such date. After giving effect to the Amendment, the aggregate amount of revolving credit commitments under the Credit Agreement remains $75 million. The Company has the option to increase the revolving credit commitment thereunder by an additional $25 million. In connection with the Amendment, the Company has incurred approximately $0.2 million in debt issuance costs.

Current wording

In October 2025, the Company entered into the Third Amendment to Credit Agreement and Amendment to Security and Pledge Agreement (the “Amendment”). The Amendment further amends the 2021 Credit Facility to, among other things, (1) extend the maturity date of the revolving credit facility from November 8, 2026 to October 17, 2030, and (2) increase the letter of credit commitment to an amount equal to the lesser of (a) $15 million, and (b) the amount of the revolving credit facility as of such date. After giving effect to the Amendment, the aggregate amount of revolving credit commitments under the Credit Agreement remains $75 million. The Company has the option to increase the revolving credit commitment thereunder by an additional $25 million. In connection with the Amendment, the Company has incurred approximately $0.2 million in debt issuance costs. The 2021 Credit Facility bears variable interest rates at the prevailing Term Secured Overnight Financing Rate plus the applicable margin (1.75% at March 31, 2026). At March 31, 2026 and December 31, 2025, we had no borrowings on the 2021 Credit Facility and the available borrowing capacity was $69.9 million and $69.9 million, respectively.

Previous wording

For thenine months ended September 30, 2025, net cash provided by operating activities was $127.5 million and consisted of net income of $52.2 million adjusted for non-cash items of $106.6 million, which were partially offset by a change in working capital and other activities of $31.3 million. The use of cash from working capital was primarily driven by a decrease in operating lease liabilities of $42.4 million primarily due to payments made under the related lease agreements and an increase in merchandise inventory of $31.7 million, which was partially offset by an increase in client deposits of $33.1 million and an increase in accrued expenses of $9.2 million in the nine months ended September 30, 2025.

Current wording

For thethree months ended March 31, 2026, net cash used in operating activities was $9.7 million and consisted of net income of $2.2 million adjusted for non-cash items of $35.7 million, which were partially offset by a decrease in working capital and other activities of $47.6 million. The use of cash from working capital was primarily driven by an increase in merchandise inventory of $30.7 million, a decrease in operating lease liabilities of $17.9 million primarily due to payments made under the related lease agreements, a decrease in accrued expenses of $16.1 million, a decrease in accounts payable $11.9 million, and an increase in prepaid and other current assets of $7.2 million, which was partially offset by an increase in client deposits of $35.3 million in the three months ended March 31, 2026.

Previous wording

For thenine months ended September 30, 2024, net cash provided by operating activities was $115.4 million and consisted of net income of $47.3 million an increase of non-cash items of $85.4 million, which were partially offset by a change in working capital and other activities of $17.3 million. The use of cash from working capital was primarily driven by an increase in merchandise inventory of $40.3 million, a decrease in operating lease liabilities of $23.1 million primarily due to payments made under the related lease agreements, a decrease in accrued expenses of $8.1 million and an increase in prepaid and other assets of $6.5 million. This was partially offset by an increase in client deposits of $50.3 million and an increase in accounts payable of $9.0 million in thenine months ended September 30, 2024.

Current wording

For thethree months ended March 31, 2025, net cash provided by operating activities was $46.5 million and consisted of net income of $4.9 million an increase of non-cash items of $30.1 million and an increase in working capital and other activities of $11.5 million. The change in working capital was primarily driven by an increase in client deposits of $42.3 million, which was partially offset by a decrease in operating lease liabilities of $13.9 million primarily due to payments made under the related lease agreements, a decrease in accounts payable of $8.7 million, an increase in merchandise inventory of $4.4 million and a decrease in accrued expenses of $3.2 million in thethree months ended March 31, 2025.

Previous wording

Investing activities consist primarily of capital expenditures related to investments in retail Showrooms, vehicles, information technology and systems infrastructure, as well as supply chain investments.

Current wording

Investing activities consist primarily of capital expenditures related to investments in Showrooms, vehicles, information technology and systems infrastructure, as well as supply chain investments.

Previous wording

For thenine months ended September 30, 2024, net cash used in investing activities was $88.7 million primarily due to investments in Showrooms, strategic investments in our supply chain, and information technology and systems infrastructure.

Current wording

For the three months ended March 31, 2026, net cash used in investing activities was $15.9 million primarily due to investments in Showrooms, investments in our supply chain, and information technology and systems infrastructure, which was partially offset by insurance proceeds for property, furniture, and equipment.

Previous wording

For the nine months ended September 30, 2025, net cash used in investing activities was $59.7 million primarily due to investments in Showrooms, vehicles, investments in our supply chain, and information technology and systems infrastructure.

Current wording

For thethree months ended March 31, 2025, net cash used in investing activities was $27.6 million primarily due to investments in Showrooms, vehicles, and information technology and systems infrastructure.

Previous wording

Total capital expenditures, net of landlord contributions decreased by $18.4 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Current wording

Total capital expenditures, net of landlord contributions decreased by $9.3 million in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Previous wording

We anticipate our total capital expenditures, net of landlord contributions to be between $65 million and $75 million in fiscal year 2025, primarily related to the opening of new Showrooms.

Current wording

We anticipate our total capital expenditures, net of landlord contributions to be between $70 million and $90 million in fiscal year 2026, primarily related to new Showrooms and information technology and systems infrastructure.

Previous wording

For thenine months ended September 30, 2024, net cash used in financing activities was $72.1 million primarily due to the payment of the special dividend on our Class A and Class B common stock.

Current wording

For thethree months ended March 31, 2026, net cash used in financing activities was $50.6 million primarily due to the payment of the special dividend on our Class A and Class B common stock.

Previous wording

For thenine months ended September 30, 2025, net cash used in financing activities was $2.9 million primarily due to the repurchase of shares for payment of withholding taxes for equity based compensation.

Current wording

For the three months ended March 31, 2025, net cash used in financing activities was $1.9 million primarily due to the repurchase of shares for payment of withholding taxes for equity based compensation. These shares were not repurchased in connection with any publicly announced share repurchase programs.